The slowdown recorded by official indicators in Saudi Arabia’s real estate market during the first half of this year did not surprise observers. Rather, it reflected the practical unfolding of a “rebalancing” phase whose signs began to emerge in 2025.
With major regulatory changes, such as parcel-based real estate registration coming into effect, investors and developers are now recalculating and watching the market carefully, ahead of a second half that experts expect to be led by real demand in residential projects and integrated logistics sectors.
Data from the Saudi Ministry of Justice’s Real Estate Market, covering property transfers, showed that the total value of real estate transactions fell in the first half of 2026 to $21.9 billion, or 82.2 billion riyals, compared with $45.1 billion, or 169.4 billion riyals, in the same period of 2025 — a 51.5 percent decline, the steepest among the indicators.
Transaction activity also slowed, with the number of deals falling to 161,900 from 220,000 a year earlier, a decline of 26.4 percent. The drop extended to the number of traded properties, which fell from 204,900 to 138,600, down 32.4 percent.
The total traded area also declined to 1.625 billion square meters from 2.088 billion square meters in the first half of 2025, a fall of 22.2 percent.
Prices, however, showed relative resilience compared with transaction volumes. Official data showed the average price per square meter fell to 1,965 riyals from 2,217 riyals a year earlier, down 11.4 percent. The highest recorded price per square meter also dropped to 330,578 riyals from 453,124 riyals, a decline of about 27 percent.
Reassessment phase
Real estate expert and appraiser Ahmad Al-Faqih told Asharq Al-Awsat that the decline in transaction value and volume was “very logical” given two decisive developments in recent months: regional geopolitical events represented by the US-Iran war, and the actual impact of government decisions aimed at rebalancing the market.
Both were reflected quantitatively and qualitatively in trading activity, he said.
Al-Faqih added that it was important to distinguish between traded and non-traded assets, noting that the exchange’s indicators show many investors have moved their assets into the “non-traded” category as they choose to wait and reposition themselves in light of market developments.
He described other economic variables, such as interest rates and financing costs, as “secondary factors” compared with the geopolitical and regulatory files.
“The real estate investor, especially the speculator, is now going through a serious reassessment phase, particularly with the government’s clear direction toward developing the sector and correcting its practices,” he explained. “This approach will help redirect large liquidity flows into genuine development projects and increase housing supply.”
Market resilience
Real estate expert Abdullah Al-Mousa agreed that the more than 51 percent fall in transaction values cannot be read as “a direct reflection of an equivalent decline in prices.” A deeper reading of the indicators is needed, he told Asharq Al-Awsat.
Al-Mousa said the market underwent a pivotal institutional shift in the first half of 2026, with the expanded application of parcel-based registration and the transfer of real estate transactions in key areas — foremost among them Riyadh — to the Real Estate Registry system.
This is a major variable that must be considered in annual comparisons, he said.
He pointed to the market’s underlying resilience, saying the 11 percent decline in the average price per square meter, compared with a drop of more than half in transaction values, confirms that the sector has not seen a sharp price correction
Instead, the composition of deals has changed, with fewer billion-riyal transactions and high-value assets, while prices in locations with real demand have remained relatively stable, he remarked.
Al-Mousa said the market is undergoing a phase of “re-sorting,” rather than a broad price correction. Liquidity has become more selective, and investors are increasingly turning toward high-quality assets with stronger investment feasibility.
Looking ahead, he expects the second half of 2026 to bring gradual, qualitative improvement in real estate activity, while ruling out a quick return to the record transaction levels of previous years.
The sector is in a transitional phase driven by regulatory reforms, greater transparency and a more advanced legislative framework — factors that strengthen investor confidence over the medium term, even if their full impact takes time to appear, he went on to say.
Al-Mousa said integrated residential projects that meet actual demand, along with the logistics and industrial sectors supported by economic growth and major projects, are likely to lead growth in the coming period.
The market’s success in the next phase, “will not be measured only by transaction volume and quantity, but by its ability to attract quality investment, raise asset-use efficiency and achieve a sustainable balance between supply and demand,” he added.
